Monday May 5, 2008 - 14:52:16 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (5 May 2008)
The euro appreciated
vis-√†-vis the U.S. dollar today as the single currency tested offers around
the US$ 1.5500 figure and was supported around the $1.5420 level. Technically, today‚Äôs intraday low was just
above the 38.2% retracement of the move from $1.4430 to $1.6020. European Central Bank President Trichet
reported ‚Äúglobal growth remains significant despite the slowing down observed
in a number of industrialized economies and clearly thanks to the remarkable
resilience of a great number of emerging economies.‚ÄĚ He added inflation risks remains
‚Äúsignificant‚ÄĚ on account of oil, commodities, and food price increases. Most traders believe the ECB will keep its
benchmark main refinancing rate unchanged at 4.0% this week. Data released in
the eurozone today saw Sentix May investor confidence lost 0.6 points to
3.5. In U.S.
news, the April ISM non-manufacturing index improved to 52 from 49.6 in
March. Data to be released in the U.S. this week
include unit labour costs, non-farm productivity, and foreign trade. Remarks from Federal Reserve officials
including Kansas City Fed President Hoenig, Fed Governor Kroszner, and former
Federal Reserve Chairman Greenspan will be closely monitored. Euro bids are cited around the US$ 1.5345
The yen appreciated
vis-√†-vis the U.S. dollar today as the greenback tested bids around the
¬•105.10 level and was capped around the ¬•105.45 level. Liquidity was reduced on account of the
ongoing Japanese Golden Week holidays and is likely to be reduced in Tokyo for the duration of
the week. Finance minister Nukaga talked
about surging inflation in many parts of the world saying ‚ÄúAs nations try to
figure out what impact that higher input prices will have and how to deal with
economic growth and inflation, it's very important that we discuss and bring
our collective know-how together on how to make policy in these very difficult
times.‚ÄĚ The Nikkei 225 stock index last
closed at ¬•14,049.26. Dollar bids are
cited around the ¬•103.65/ ¬•101.35 levels.
The euro depreciated vis-√†-vis
the yen as the single currency tested bids around the ¬•162.35 level and was
capped around the ¬•163.10 level. The British pound came off vis-√†-vis
the yen as sterling tested bids around the ¬•206.80 level while the Swiss franc appreciated vis-√†-vis
the yen and tested offers around the ¬•208.30 level. The
Chinese yuan weakened vis-√†-vis the U.S. dollar as the greenback closed at
CNY 7.0016 in the over-the-counter market, down from CNY 7.0002. Data released in China today saw the CFLP April
manufacturing PMI survey improve to 59.2 from 58.4 in March. Goldman Sachs sees April inflation around
8.5% and Lehman Brothers sees 2008 GDP growth below 10.0%. People‚Äôs Bank of China
Governor Zhou said ‚ÄúWe're always observing very carefully whether there is significant
hot money flow into China.
In the recent circumstances, (after) the U.S.
lowered down the interest rates, a lot of short-term investors pay attention to
investing in China.
These circumstances may create some new situation.‚ÄĚ Finance minister Yi reported China will
boost the flexibility of the yuan‚Äôs exchange rate.
The British pound came off
vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9660
level and was capped around the $1.9785 level.
Technically, today‚Äôs intraday high was right around the 23.6%
retracement of the move from US$ 2.0395 to $1.9595. U.K. financial markets were closed
for a public holiday and liquidity will return to normal tomorrow. Some traders believe Bank of England‚Äôs
Monetary Policy Committee will reduce its repo rate this week while others believe
BoE will not reduce interest rates until June.
Cable bids are cited around the US$ 1.9505 level. The
euro moved higher vis-√†-vis the British pound as the single currency tested
offers around the ‚ā§0.7865 level and was supported around the ‚ā§0.7815
The Swiss franc
appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids
around the CHF 1.0515 level and was capped around the CHF 1.0565 level. Technically, today‚Äôs intraday low was right
around the 61.8% retracement of the move from CHF 1.1105 to CHF 0.9645. U.S. dollar offers are cited around the CHF 1.0760
level. The euro moved higher vis-√†-vis the Swiss franc as the single
currency tested offers around the CHF 1.6340 level while the British pound weakened vis-√†-vis the Swiss franc as sterling
tested bids around the CHF 2.0705 level.
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